At TechMarketView we like companies that make profits and generate cash. So we were rather impressed with Facebook yesterday. See Facebook – What a surprise. So Amazon’s ‘surprise’ $7m loss in Q2 puts us in a quandary. Here is Amazon, which everyone uses and which has just reported a 22% rise in Q2 sales to $15.7b, not able to make even a modest profit. The outlook for Q3 was for revenues of $17b – again lower than expected.
Amazon would argue – indeed does argue – that they are investing heavily for the future. Diversifying away from straight online retail into gadgets like the Kindle and big data centres. But there are many who are starting to wonder if Amazon can really turn on the profits to justify its $138b valuation. There surely must come a time when even Amazon must demostrate its profit making abilities.